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Silo Mills has a beta of 0.87 and a cost of equity of 11.9 percent. The risk-free rate of return is 2.8 percent. The firm is currently considering a project that has a beta of 1.03 and a project life of 6 years. What discount rate should be assigned to this project?
EBIT
Earnings Before Interest and Taxes; a measure of a firm's profitability that includes all expenses except interest and income tax expenses.
Unlevered Firm
A company that operates without any debt financing, relying solely on equity for its financing needs.
Levered
Pertaining to the use of borrowed capital or debt to increase the potential return of an investment.
Break-Even EBIT
The level of Earnings Before Interest and Taxes that a company needs to achieve in order to cover all of its operating expenses without making a profit or loss.
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